Analyst Perspectives

As he opened last week’s Cloudforce 2011 conference in London, Salesforce.com CEO Marc Benioff declared that companies “must become social or die.” He reiterated the message in answer to a direct question I put to him during lunch with the media and analysts. I have heard several of his keynotes, and reviewed my colleague analysis from recent Dreamforce conference in San Francisco. and this one had a distinct change of emphasis. Benioff seems to feel that the cloud argument has been won, his big CRM competitors have been overcome and it is time to focus on helping companies grasp the changed business environment they now exist in. Dare I say it, there was even a hint that the answer is software – specifically, software to enable what Salesforce calls the social enterprise.

What is the social enterprise? In Salesforce’s view it is a company that adopts its Chatter and supporting services. Chatter is a new ”product” companies can use to collaborate more efficiently and effectively, both internally and, with the latest version, externally with customers and partners.

This would be a welcome scenario for many of them. Ventana Research’s benchmark research into customer experience management shows how difficult effective collaboration is for companies. First, companies have to support multiple channels of communication with their customers, and providing consistent responses across all the channels is extremely difficult, not least because the channels often uses their own sources of customer data. Second, almost all business units interact with customers, and this too makes collaboration difficult because they use different processes and systems; thus collaboration between business units is often hard to achieve. Third, although contact center agents handle a large number of customer interactions, many agents lack easy access to the systems and information they need to resolve customer problems. Fourth, social media has taken many of these issues out of the hands of companies, as many customers now prefer to collaborate via social media rather than directly with companies, placing their actions beyond the company’s control. Some Salesforce.com customers I have spoken with indicate that Chatter and Service Cloud address all four of these issues. Although I still can’t get an explanation of what direct financial benefits these products deliver, each customer I spoke with responded that having implemented them their users would not be without them.

Although the focus of Benioff’s keynote was on the social enterprise, of course there were product announcements. Scattered through the two-and-a-half hours were quick announcements and demonstrations of the latest updates to Sales Cloud, Service Cloud andChatter. There was also news on the latest updates to Radian6, which allows companies to monitor “conversations” on social media, data.com, which allows companies to enrich their customer data from publicly available sources (including social media sites such as Facebook), and the force.com platform, which, along with the new acquisition Heroku, provides a rich environment for customers and partners to develop applications. There also was news of a relatively new service, database.com, which is a cloud-based database that can be used to integrate cloud applications. Finishing off was an announcement about touch.salesforce.com, which eventually will provide the majority of the company’s services from any smartphone or tablet device. All these products will be Chatter-enabled, and that added strength to the message that companies need to become more social.

During the afternoon session Benioff interviewed Michael Dell in a “fireside chat.” After lots of mutual admiration and a quick insight into how Dell has developed over the years, the conversation turned to how Dell is working with  Salesforce to turn itself into a social enterprise, complete with a social media command center that monitors all Twitter conversations that mention Dell. This is used alongside social media forums to judge customer sentiment about Dell and determine where the company needs to improve products and services. It came out that Dell has set a precedent and “forced”  Salesforce to move away from monthly usage-based charges to an enterprise license – a pointer to the future perhaps? In a final twist, the conversation turned to how the public sector should be taking advantage of cloud-based systems and the millions of dollars and pounds the U.S. and U.K. governments could save; Benioff vociferously repeated this message during the analyst lunch.

I can’t report on this impressive event without reference to the partner forum. More than 50 partners set up shop in the foyer of the National Theatre to show their wares to attendees. I was disappointed in the lack of customer service and contact center vendors; most exhibitors showed sales and marketing applications, or services for implementing Salesforce.com products. Even if companies become social they will still need contact centers, as lots of consumers still like talking to real people. Service Cloud provides a good application to support agents as they try to resolve customer interactions, but by itself it is not a full contact center in the cloud. Companies that want to enhance their centers therefore need to look for partners, and unless I missed some, only NewVoiceMedia was present with its cloud contact center. Social media might be a good forum to gather customer feedback, but once again it can only go so far, and companies that want more specific feedback have to deploy specific applications. Again as far as I could determine, only Clicktools was present with its enterprise feedback application.

No doubt social media is here to stay, and many millions of people have changed the way they communicate – from voice to electronic – and changed the way they work – more and more work at home, remotely or on the move. Benioff would have us believe that this trend will continue and if companies fail to keep up, they will lose out to companies that do.

I’m not convinced by the term “social enterprise,” but there is no doubt the business world has changed more dramatically in the last 18 months than perhaps in any other 18-month period. The economy has crashed, electronic communications have taken off at an unprecedented rate, technology has advanced dramatically, cloud computing has changed the way companies purchase software, and the second Internet wave is under way with the rampaging adoption of smartphones and tablets. Salesforce.com is responding to these changes faster than any other vendor I know, but behind all the hype it is still the early days. Many companies I know haven’t changed the way they operate since I started in IT many years ago. Companies such as Dell, Burberry and Toyota are working with Salesforce to radically change the way they operate, the way they collaborate internally, and the way they interact with their customers; the question is how many others will see the light and adopt similar plans.

Is your company becoming more social? If so, I’d love to know how. Please come and collaborate with me on future of social enterprise.

Regards

Richard Snow – VP & Research Director